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On The Empirics of Ecosystem Services Schemes: Technology, Risk and Compliance

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  • Sauer, Johannes
  • Walsh, John

Abstract

The overall aim of this study is to empirically investigate the cost structure of a management agreement type agri-environmental instrument and to identify factors for cost variation over space and time. We control for the actual level of compliance by using compliance weighted average scheme cost ratios. Beside technological and economic performance measures, we also incorporate risk proxies. In addition, we consider unobserved heterogeneity or path dependency with respect to unknown administrative, spatial and farm specific factors. Hence, we try to disentangle random and fixed scheme cost effects by applying a bootstrapped mixed-effects regression approach using the empirical case of the Environmental Stewardship Scheme in the UK. Regional and sectoral variation in the scheme uptake and the cost of compliance for the participating farms lead to significant cost effects reflecting heterogeneity with respect to management skills and attitudes, production focus, location, technologies, economic performance and risk.

Suggested Citation

  • Sauer, Johannes & Walsh, John, 2010. "On The Empirics of Ecosystem Services Schemes: Technology, Risk and Compliance," 2010 Annual Meeting, July 25-27, 2010, Denver, Colorado 61147, Agricultural and Applied Economics Association.
    • Handle: RePEc:ags:aaea10:61147
    DOI: 10.22004/ag.econ.61147
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    1. Bourgeon, Jean-Marc & Jayet, Pierre-Alain & Picard, Pierre, 1995. "An incentive approach to land set-aside programs," European Economic Review, Elsevier, vol. 39(8), pages 1487-1509, October.
    2. Uwe Latacz-Lohmann & Carel Van der Hamsvoort, 1997. "Auctioning Conservation Contracts: A Theoretical Analysis and an Application," American Journal of Agricultural Economics, Agricultural and Applied Economics Association, vol. 79(2), pages 407-418.
    3. Rob Hart, 2005. "Combating moral hazard in agri-environmental schemes: a multiple-agent approach," European Review of Agricultural Economics, Oxford University Press and the European Agricultural and Applied Economics Publications Foundation, vol. 32(1), pages 75-91, March.
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